The mood in the market soured sending equity markets lower again in the Asian session. Rising coronavirus cases prompting second wave fears, in addition to a lack of Progress by US lawmakers to agree to more fiscal support dragged on sentiment
The safe haven US Dollar and Japanese Yen extended gains versus major peers, whilst the risk-sensitive Australian Dollar tumbled sub $0.72 after the Reserve Bank of Australia Deputy Governor, Guy Debelle, hinted towards additional monetary stimulus.
Gold and silver moved lower, as did US 10-year Treasuries yields. The rising US Dollar weighed on commodity prices.
Today, Federal Reserve Chair Jerome Powell will give a semi-annual testimony before the Senate Committee. US existing home sales for July will also be under the spotlight.
Risk Appetite hit by covid fears
Fears are growing that tighter restrictions in several European countries could derail the Eurozone’s economic recovery and could see risk assets come under pressure if the covid outbreak isn’t contained..
France, Germany, Spain and Italy have avoided tightening lockdown restrictions despite covid cases jumping over the past 6 weeks, in an attempt to protect their economies..
The World Health Organization’s regional director for Europe – Hans Kluge – warned that the situation in Europe is serious and alarming. Another economically ravaging lockdown almost seems inevitable.
In fact, local authorities in Madrid, Spain and Nice, South of France have announced a restriction on gatherings, park access and public areas in a bid to stem the spread of the virus.
The VDAX Index’s – the DAX 30 Volatility Index has soared in line with tightening restrictions surging from the February breakaway gap on September 16. This points to deteriorating sentiment
A worsening health situation could continue to stoke volatility and limit the upside of regional markets